Amid a surge in demand for housing, the latest data shows that land prices in Sydney have risen by almost 40 percent in the past two years.
Releasing the June quarter edition of their Residential Land Report, Housing Industry Association and CoreLogic say median lot prices for vacant residential land rose by 7.1 percent across Australia over the past year and now sit at $237,535.
Land prices have now risen across the nation by around 15 percent over the past two years.
Price increases are particularly steep in Sydney, were median residential lot values have risen by around 39 percent over the past two years to go from just over $302,250 in the June quarter of 2014 to $420,000 in the June quarter just gone.
The increase comes at the same time as sales of residential lots in Sydney have fallen by 26.9 percent over the past year despite having recovered over the past three months – a likely indication that supply is limited following several years of strong purchasing activity.
Demand for vacant lots has been rising along with the construction of new detached housing.
Although most media attention revolves around the red-hot high-rise apartment sector, approvals for new detached houses in New South Wales were in fact 32 percent higher over the two years to June 2016 compared with the previous two years prior to that.
The latest report comes as federal treasurer Scott Morrison promised to encourage states and territories to ease planning and land use restrictions in order to free up creation of more dwellings.
Morrison told a UDIA event in Sydney that whilst the majority of Australians live in their own home, ‘for each new generation, this aspiration is proving more and more difficult to achieve’.
CoreLogic research analyst Tim Lawless said Australia has adequate levels of supply with regard to developable land but suffers from a shortage of land which is currently available for development and which lies in areas which are adequately serviced in terms of transport.
He says governments should seek to maximise opportunities for urban infill through reforming land use regulations and should look to ensure that transport infrastructure provision within the outer suburbs was adequate.
Outside of Sydney, land price growth over the past year has been strong in Hobart (19.2 percent, Melbourne (10.5 percent) and Brisbane (5.8 percent) but has been modest in Adelaide and Perth.